Your Right to Know

A Bexley citizens task force recommends that some students be taxed, from preschoolers to those
in college, to help offset budget cuts, especially those stemming from the end of the estate
tax.

Known as payment in lieu of taxes, or PILOT, the plan involves taxing nonresidents who benefit
from city services but don’t pay city taxes. It has been used in some cities, including Boston,
Philadelphia and New Haven, Conn., but rarely, if ever, in Ohio.

Nonprofit institutions, including hospitals, museums and schools, are typical targets. Bexley
has three major schools: St. Charles Preparatory Academy, Columbus School for Girls and Capital
University, most of whose students are not Bexley residents.

The fee would target “visitors who regularly spend substantial portions of their days in Bexley,
thereby benefiting from city services, but who do not pay city income taxes as residents,”
according to the year-old task force report. It could range from as little as $5 a month for
children in half-day day care to $200 a month for Capital University students who pay room and
board.

The revenue would net the city almost $500,000 a year, according to task force estimates. The
city’s annual budget is about $10.7 million this year. Estate taxes have contributed up to 20
percent of previous years’ budgets.The task force also has recommended unmanned speed cameras and
other ideas for raising money.

The fact that the city would consider a student tax shows how hard state cuts have squeezed
local governments, said Kent Scarrett, spokesman for the Ohio Municipal League.

“If Bexley is successful in doing this, I’ll bet there will be a lot of other communities that
would entertain it.”

But he warns of political dangers for those governments desperate for additional revenue.

“It’s going to cause them to adjust their taxing practices and go into areas that were once
their sacred cows,” Scarrett said. “Our cities don’t want to be pitted against community
organizations that previously weren’t part of a taxing institution.”St. Charles has opposed the
fee, noting its contribution of $70,000 annually in payroll tax. And Capital and Columbus School
for Girls offer their swimming pools and public spaces for use by residents.

A 2010 report by Lincoln Institute of Land Policy, based in Cambridge, Mass., cited the success
of the concept when it is voluntary.“In all cases, a primary characteristic … is that it is
voluntary; that is, there is no law requiring a nonprofit to make a PILOT,” according to the
report.

A mandatory fee likely would “prompt a battle with nonprofits and lead to years of contentious,
costly and unproductive litigation,” the report concluded.

Bexley’s proposal is to mandate the tax.

“This sends the right message to the overall community that we’re all willing to contribute to
ensure that we maintain that high level of quality services,” said resident James Bowman, a member
of the task force committee that came up with the idea.

Bowman said the city is reviewing the legal issues.

Other cities have forged agreements successfully. Yale University pays its host city, New Haven,
up to $10 million annually.

“I think it’s been mutually beneficial, and it’s not forced,” said Anna Mariotti, city
spokeswoman.

And in July, about 40 tax-exempt organizations in Pittsburgh volunteered payments to the city of
more than $5.2 million over two years. The city’s budget is $469 million.Some are skeptical of the
idea.

Dublin resident Bob Horner has a son at St. Charles and another soon to enroll.

Horner said his family often shops and dines in Bexley when visiting the school. That spending,
he said, is the same as a tax — albeit voluntary.

Bowman said the tax could be temporary if the economy rebounds and development efforts produce
growth. Plus, he said, the city’s cash reserves can sustain it in the short term.

Still, Bowman thinks everyone in the city should help out.

“Given the size of the (tax) exempt footprint … we really need those exempt partners to be part
of the solution.”